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In the summer of 2017, General Motors executives started questioning a decades-old industry norm: reporting vehicle sales every month. They ditched the practice in April 2018, choosing to report sales only on a quarterly basis.
“We knew that a lot of our competitors would watch to see what our experience would be and if we’d stick to our guns,” said GM spokesman Jim Cain. “We always expected they’d follow.”
In fact, Ford last month switched to quarterly reports.
Fiat Chrysler Automobiles and the foreign automakers continue to report each month. On Friday, they reported retail new vehicles sales for February, with FCA sales down 2 percent from a year before.
Every 10 days?
GM says quarterly reports more accurately reflect market trends than shorter-term snapshots.
“The media and economists are trying to get a view on exactly how the market is functioning the day of sales reporting, and we don’t have enough data to conclude everything,” said Jonathan Smoke, chief economists for Cox Automotive. “We won’t know how much of those results are due to fleet sale. Or how much of that was incentivized. In the future, I foresee everyone moving away from monthly reports.”
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Quarterly reports will allow analysts to dig in to spot real market trends, said Smoke. But if more automakers switch to quarterly sales, “You have to rely on third-party and government data. So we’ll have more uncertainty and the automakers will lose some control over the dialogue of how their business is performing.”
High interest in numbers
The idea of reporting car sales every month versus every three months still has value, other analysts say.
“There is a lot of interest in these (monthly) numbers,” said Jessica Caldwell, executive director of industry analysis for Edmunds. “We live in a world where there is so much information that people want more information versus less.”
In an ironic twist, it was GM that initially provoked short-term car-sales reporting in the 1920s. Then, longtime GM Chairman Alfred Sloan devised the idea of compiling dealers’ sales every 10 days and reporting it to the public.
It served a purpose at that time. GM nearly collapsed then due to a lack of information about sales and inventory, so it needed the reports. Soon, other autormakers followed, and the 10-day sales report became the norm for nearly 60 years.
Then on Dec. 1, 1990, Chrysler cited cost and the hassle of tabulating the numbers every two weeks as one reason to switch to a 30-day schedule. It also said the short 10-day reporting periods exaggerated Asian automakers’ gains in the U.S. market.
Soon others followed and 30-day sales reports became the norm.
GM tunes out noise
By 2017, GM considered the massive time it took to compile its sales stats each month and recognized that the results did not significantly move the stock to provide long-term shareholder value, said Cain. GM looked at the airline and retail industries, too, as examples of moving to quarterly reports years ago. Walmart changed its sales reporting in 2009, for example.
“We found in the first hour of trading, you’d see much larger price changes which would smooth themselves out over the course of the day, so we were creating that short-term volatility simply by the way the industry was releasing the sales,” said Cain.
Also, the auto industry is highly competitive and volatile. Numerous factors can drive sales in either direction in any given month. For example, a severe storm could wipe out dealer inventory, eroding sales that month. Cain said 30-day sales reports make it “difficult to see through all the noise and see of what the real trends are.”
But on a quarterly basis, those short-term fluctuations that influence sales tend to smooth themselves out, Cain said.
For example, new car sales are typically slow in January and February, but tend to spike in March, making the first-quarter report more complete.
For that reason, other automakers might follow GM’s lead, but others, especially smaller ones such as Subaru, might not because a monthly sales report allows them to, “get into the news cycle more frequently,” said Caldwell.
Ford made its decision to move to quarterly sales calls in January, saying the move was what was “best for our business,” said Said Deep, Ford spokesman.
Ford still provides its monthly sales numbers to some of the data houses, but will only host an analyst and media sales call once a quarter, said Deep.
The decision “was a result of trying to smooth out our sales data. Monthly sales can be more volatile,” Deep said. “The information is still out there for those who need it on a monthly basis, we’re just having our calls on a quarterly basis.”
Ford’s decision made sense, said Thomas King, senior vice president at JD Power’s Data and Analytics Division. King said he wasn’t surprised that Ford followed GM.
“Typically, if one makes the shift, it makes it much easier for others to follow,” said King. “There’s a lot of media coverage on the stock prices of those companies, so their focus was on how the monthly sales reports impacted the stock prices. The open question is will others follow?”
Icy February sales
Stephanie Brinley, IHS Markit principal analyst, said in considering a switch to quarterly sales reporting, each automaker has to decide what works best for its metrics and “the stories they want to tell.” But she’s in favor of the quarterly reports, saying bigger picture prevents misreading market trends and not getting monthly numbers doesn’t negatively impact her analysis.
Meanwhile, February new-vehicle sales for those that did report came in cooled from 2016’s record level of 17.5 million vehicles as Americans bought used vehicles coming off leases. Other consumers are keeping their vehicles longer because quality and durability have improved.
Smoke said February sales results might have been helped by consumer fear that new car prices will rise later this year if President Donald Trump enacts tariffs on imported vehicles.
“February could be one of the last really strong months of the year because there are other headwinds facing us,” said Smoke.
The month’s results are a good barometer of “the gradual sales decline we expect through 2019,” said Jeremy Acevedo, Edmunds’ manager of industry analysis. “We’re really starting to see a slump in retail demand that stems from the growing costs of new car purchases.”
Here are the February results compared with February 2018.
Edmunds forecast: -1.9 percent
Cox Automotive forecast: 2.5 percent
Actual results: -2 percent (162,036 vehicles)
Fiat Chrysler’s Jeep brand, which was red hot in 2018, cooled off a bit in February with a 4 percent sales decline. Most notably, sales of the completely redesigned Wrangler SUV, launched last year, are down 6 percent to 15,001.
The Ram truck and van brand soared 24 percent to 45,542 trucks sold in the month. But the Chrysler, Dodge, Fiat and Alfa Romeo brands posted declines of 36 percent, 8 percent, 50 percent and 13 percent, respectively.
Edmunds forecast: -3.0 percent
Cox Automotive forecast: -1.2 percent
Actual results: -5.2 percent (172,748)
Toyota’s namesake brand declined by 6.3 percent in sales to 152,626, while its luxury Lexus lineup reported a 4.4 percent gain in sales to 20,122.
The Tacoma truck had its best-ever February sales posting a 10.2 percent gain, and in a market dominated by pickup and SUV sales, the Corolla sedan bucks the trend. Its sales last month rose by 16.3 percent to 27,363 cars.
Edmunds forecast: -1.4 percent
Cox Automotive forecast: -0.5 percent
Actual results: -0.4 percent (115,139)
The company’s namesake Honda brand recorded a sales decrease of 1.6 percent, while the luxury Acura brand increased 11.3 percent. Honda and Acura combined sales of SUVs, crossovers and pickups rose 4.6 percent, mitigating a 6 percent plummet in car sales.
Honda maintained a strong sales pace in February, with its core models such as the Accord sedan and CR-V crossover posting gains and its HR-V small crossover setting a record. HR-V sales rose 4.4 percent in February on sales of 7,093 units, a new February record and its best month since the full impact of a flood that stopped production for four months last year. Honda’s new Passport SUV had its first full month of sales selling 1,848.
Edmunds forecast: -12.9 percent
Cox Automotive forecast: -6.1 percent
Actual results: -12 percent (114,342 vehicles)
Nissan sales plunged by double digits for the sixth time in the last eight months. The company’s namesake brand reported a sales decline of 11.4 percent, while its sales in its luxury Infiniti lineup tumbled 17.3 percent.
Nissan’s most popular model, the Rogue crossover, saw its sales fall 16.3 percent to 31,899. That’s a slightly better performance over January’s sales of the vehicle. In January, Rogue sales fell 27.8 percent to 26,113.
Edmunds forecast: -5.8 percent
Cox Automotive forecast: -1.3 percent
Actual results: GM no longer reports sales on a monthly basis.
Ford Motor Co.
Edmunds forecast: -0.8 percent
Cox Automotive forecast: -1.7 percent
Actual results: Ford no longer reports sales on a monthly basis.
Edmunds forecast: 0.6 percent
Cox Automotive forecast: 3.7 percent
Actual results: Not yet available.
Edmunds forecast: -3.3 percent (does not include Porsche)
Cox Automotive forecast: -1.1 percent
Actual results: Not yet available.
Edmunds forecast: (not provided)
Cox Automotive forecast: 1.6 percent
Actual results: Not yet available.
Edmunds forecast: 19,644 vehicles (year over year comparison not provided)
Cox Automotive forecast: (not provided)
Actual results: Like GM and Ford, Tesla reports vehicle sales on a quarterly basis.
The full-year forecast for the industry is 16.8 million new vehicle sales, according to Cox Automotive, down from a robust 17.3 million vehicles last year.
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